Monday, December 9, 2013

Why Were Tariffs Politically Important in Late 19th-Century America?

After the Civil War, new industries brought Americans not
just new products, but also more spending money and leisure time than any
generation had ever had before. Far flung railroad, oil, and steel

President Grover Cleveland humiliated by the Wilson-Gorman Tariff Act.

operations,
along with those of every other business, needed middle managers who could
oversee production and sales and then report back to business owners. These new
“white collar” workers had steady incomes and free time. They bought nice clothing
and novels, and went to the theater; their wives played lawn tennis and their
children had ice cream to eat and toys to play with at newfangled parties given
just for them on their birthday.

Big business brought comfort and entertainment to many
Americans, but it also brought grinding poverty to many others. Workers
sweating near factory furnaces and entrepreneurs forced out of markets by monopolists
resented the power of industrialists. By 1880 they focused their anger on the
fact that American industry held its extraordinary position because it was
protected by a law that kept foreign goods out of America. That law was called
a tariff.

Tariffs were essentially taxes on products coming into
America. They meant that foreign goods could not compete with American products
because, no matter how cheaply they could be produced, the addition of tariff
fees to their selling costs would make them more expensive than American goods.
Since American producers did not have to worry about foreign competition, the
leaders in an industry could work together and set whatever prices they wished.

People squeezed in the new economy resented the fact that
tariffs kept prices artificially high. It didn’t seem fair that laws should
prop up business while workers barely scraped by on pennies and industrialists
like J. D. Rockefeller and Cornelius Vanderbilt lived in mansions in New York
City and built 70-room “cottages” in Newport, Rhode Island.

No one really knew what to do about the huge fortunes and
great poverty of the post-Civil War years. When the Founding Fathers drafted
the Constitution, no one could envision those sorts of extremes of wealth. Many
late 19th-century Americans urged government to stop industrialists from
joining together to set the high prices that made them so rich. Others pointed
out that the Constitution had given government no power to break combinations
of businessmen.

The Constitution did, though, give Congress the power to
regulate the tariff. So, beginning in the 1880s, when the problems of industrialization
began to become apparent, Americans who didn’t like the rise of big business
clamored for Congress to lower the tariffs that kept foreign products out of
the country. Foreign competition, they thought, would break the monopolies that
American businessmen used to control the economy.

For the rest of the century, the tariff was the central
issue in American politics. Debates over the tariff were really fights over whether
the government should protect business or workers when it developed economic policy.
Republican congressmen backed a high tariff because they insisted that
protecting business would guarantee a healthy economy in which workers could
find jobs. Democratic congressmen wanted to lower the tariff, because they
insisted that the economy would collapse if people couldn’t afford to buy very
much.

Republicans had invented the nation’s system of extensive
tariffs in 1861 to develop new businesses and to raise money to pay for the
Civil War. After the war, the tariff became their signature issue. Republicans controlled
every branch of the national government from 1861 to 1875, but in that year,
Democrats took control of the House of Representatives. Republicans got nervous.
For the rest of the century, they focused all their energy on staying in power
so they could keep the tariff high. They insisted that, if elected, Democrats
would destroy the economy by lowering tariffs.

Republicans managed to protect their system of tariffs until
1913, when Democratic President Woodrow Wilson and a Democratic Congress
finally lowered the tariffs and replaced the lost revenue with taxes. The fight
over the government’s role in the economy switched for a struggle on tariffs to
a fight over taxes, and few Americans even remember now why tariffs were so
important to the late 19th century. But to people who lived after the Civil
War, tariffs symbolized a much larger struggle between rich and poor, employers
and workers, capital and labor. Tariffs were at the very heart of the questions
raised by the new era of industry.

A version of this post will appear in
COBBLESTONE’S upcoming Captains of Industry issue, which examines the role of
industry and industrialists in American history.

1 comment:

Todd Arrington
said...

Great piece, Heather. Is it accurate to state that after Reconstruction, there were often minimal differences between Republican and Democratic presidential candidates besides the tariff? I know that most reporters and observers seemed to think that in 1880 there were few real disagreements between James A. Garfield and Winfield Scott Hancock other than the tariff positions of their respective parties. Thanks!